With regard to the handling of its debt, Sri Lanka and China’s EXIM bank have achieved a preliminary understanding. The arrangement, according to a statement released by Sri Lanka’s finance ministry on Wednesday (Oct. 11), settles almost $4.2 billion in outstanding debt. “It constitutes a key step towards restoring Sri Lanka’s long-term debt sustainability and will pave the way to a prompt economic recovery,” the statement mentioned.
According to the statement, the tentative parameters reached will give Sri Lanka the necessary budgetary room to carry out its ambitious reform programme.
“It should also facilitate approval by the IMF Executive Board of the first review of the IMF (International Monetary Fund)-supported programme in the coming weeks, allowing for the next tranche of IMF financing of about US$334 million to be disbursed,” the statement further added.Â
President Ranil Wickremesinghe is scheduled to visit China next week, therefore the agreement on how to address Sri Lanka’s debt arrived at that time. The country of Sri Lanka has been led by President Wickremesinghe in efforts to manage its significant debt and maintain funding under an IMF programme worth $2.9 billion.
According to a source cited by the news agency Reuters on Friday, Wickremesinghe is anticipated to meet with Chinese President Xi Jinping and may possibly meet with China’s finance and foreign ministers.
Sri Lanka made a default on its foreign debt in May of last year as a result of a decline in its dollar reserves that made it impossible for the nation to continue paying for imports of necessities like gasoline and medication.
